One of Wheaton's streams is for the Salobo mine, the largest copper deposit ever discovered in Brazil. (Image by Salviano Machado | Vale.)

Vale (NYSE:VALE), the world’s No.1 iron ore miner, is set to approve a $1 billion expansion of its vast Salobo copper-gold mine, located in Carajás, Brazil, later this month, according to people with knowledge of the matter.

The project — known as Salobo 3 — is expected to take about three years to complete and will add about 50,000 tonnes to the open-pit mine’s current capacity of nearly 200,000 tonnes of copper per year.

According to local news outlet Portal Canaã, Vale is waiting for the Ministry of the Environment's administrative arm — IBAMA — to issue a permit for the planned expansion, which could generate as many as 3,000 jobs.

The project — known as Salobo 3 — will add about 50,000 tonnes to the open-pit mine’s current capacity of nearly 200,000 tonnes of copper per year.

At around 1,800km2, Carajás is the second largest land holding in a region known for iron oxide copper-gold deposits of which Salobo is the prime example. The mine, the largest copper deposit ever discovered in Brazil, is estimated to hold more than 1 billion tonnes of the red metal.

Canada’s Wheaton Precious Metals (TSX, NYSE: WPM) is a major partner in the mine and receives 75 percent of the gold produced from it.

News of the expansion come at a time when miners are scrambling to either acquire copper reserves or boost production amid forecasts that demand of the metal will significantly outstrip supply in 2020 or even earlier.

The expected deficit will partly be a consequence of increasing demand for power generation and electric vehicles (there’s 300kg of copper in an electric bus and nine tonnes per windfarm megawatt).

But it’s also related to the fact that the current copper pipeline is at the lowest seen this century, both in terms of number and capacity.

“After delivery of Cobre Panama (with the main ramp early next year) we are left with a gap until we see the next batch of 200ktpa-plus projects in 2022-23,” Colin Hamilton, director of commodities research at BMO Capital Markets, said in April. “This is when the likes of Kamoa, Oyu Tolgoi Phase 2, and QB2 are likely to offer meaningful supply growth,” he wrote.